Virgin Australia collapsed on April 21, putting 16,000 jobs under threat.

Australian airline Virgin Atlantic which has gone bankruptImage souce: Transport Pixels via Flickr (CC BY 2.0)
Money Aviation Saturday, May 16, 2020 - 10:46

IndiGo airline's largest shareholder InterGlobe Enterprises on Friday said it has signed an agreement to participate in the sale of Virgin Australia, three weeks after the second-largest Australian carrier announced its collapse amid the coronavirus pandemic.

Billionaire Rahul Bhatia-owned InterGlobe holds a 37.8% stake in IndiGo, while Rakesh Gangwal, his family members and family trust own 36.64% of India's largest airline.

Virgin Australia collapsed on April 21, putting 16,000 jobs under threat.

The cash-strapped carrier announced that it had entered "voluntary administration" to recapitalise the business after being battered by the pandemic, which has crippled the global airline industry.

The move came after the full-service carrier, which suspended almost all flights in March following widespread travel bans, failed to secure a 1.4 billion-Australian dollar (USD 887.60 million) loan from the Australian government.

"As regards Virgin Australia, InterGlobe Enterprises has signed an agreement to participate in the sale process and is bound by the confidentiality requirements of that agreement. We are unable to say anything further at this stage," InterGlobe Enterprises said.

In July last year, Gangwal had accused Bhatia of corporate governance lapses at IndiGo and sought the intervention of the Securities and Exchange Board of India (SEBI). Bhatia had denied the allegations.

Later in the same year, Bhatia submitted a request for arbitration at the London Court of International Arbitration in the matter.

The global aviation sector has been hit hard this year as various countries, including India, have suspended air travel and gone into a lockdown to curb the spread of the novel coronavirus.

India has been under a lockdown since March 25. The virus has so far infected more than 81,900 people and killed around 2,600 in the country.

Indian airline companies have taken major cost-cutting measures in order to survive the pandemic. IndiGo has cut the salaries of its senior employees for entire 2020-21 by up to 25%.

GoAir has sent a majority of its employees on leave without pay till May-end. Air India has cut the salaries of its staff members by 10%. Similar measures have also been taken by Vistara, AirAsia India and SpiceJet.

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